Last week I talked about the dilemma faced by my friend Mark, a Vice-President of Marketing for a national retailer.
His boss is holding him to account for the sharp decline in sales and is expecting him to immediately increase promotional spending to fix the problem. His dilemma is that he knows that this is unlikely to work since his marketing intelligence has indicated that the sales decline is due to a deterioration of his company’s value proposition in the mind’s of many of its customers due to a number of factors not influenced by promotional spending.
Finding advantage requires situational awareness and understanding
I see this frequently in my consulting work. Mark’s boss is seemingly unaware of the actions of competitors and the impact that these are having on customer expectations, preferences and choice. He lacks situational awareness and understanding. As a result, the strategy he is imposing on Mark is off-target. Increasing promotional spending is simply not going to work.
The CEO must be held to account for the company’s strategy, not Mark. Determining strategy has been a core mandate for leaders throughout history. But, here’s the rub. Poor strategy decisions are the natural outcome of poor situational awareness and understanding. The CEO has mandated the wrong strategy. It is the company’s core business strategy that is misfiring, not its marketing communication strategy. To reverse the company’s declining sales he must lead the development of a business strategy centered on creating, delivering, and communicating a compelling value proposition—one that provides his company with an advantage over competitors for winning with customers.
What history can teach leaders about finding advantage
Without situational awareness and understanding there can be no strategy. The cornerstone of strategy is about understanding and exploiting the opportunities that can provide advantage. Military history, in particular, provides many rich examples.
Sun Tzu’s The Art of War
The Art of War, written by Sun Tzu in China over 2,000 years ago, “is the first known study of the planning and conduct of military operations.” (Griffith, Samuel, B.) Still considered to be one of the most important works of military literature, it has been a part of the course curricula of military colleges for many years. Since the early 1980s it has also been deemed to be an important part of the curriculum for many business school strategy courses as well.
Sun Tzu’s chapter, ESTIMATES, clearly makes the link between situational awareness and understanding and a winning strategy. He directs the reader to study the, “five fundamental factors” in order to reveal the opportunity that provides advantage against the enemy based on the capabilities of one’s own military forces:
- Moral Influence – “that which causes the people to be in harmony with their leaders, so that they will accompany them in life and unto death…”
- Weather – “the effect of natural forces; the effects of winter’s cold and summer’s heat and the conduct of military operations in accordance with the seasons.”
- Terrain – “distances, whether the ground is traversed with ease or difficulty, whether it is open or constricted, and the chances of life or death.”
- Command – “the general’s qualities of wisdom, sincerity, humanity, courage and strictness.”
- Doctrine – “the organization, control, assignment of appropriate ranks of officers, regulation of supply routes, and the provision of principal items used by the army.”
For Sun Tzu, understanding these factors are critical. “There is no general who has not heard of these five matters. Those who master them win; those who do not are defeated.”
The Battle of Thermopylae
The Battle of Thermopylae was fought in 480 BC, between an alliance of Greek city-states, led by King Leonidis of Sparta and the Persian Empire of Xerxes 1 at the narrow coastal pass of Thermopylae over the course of three days. It has been used by some as an example of a brilliantly conceived and executed strategy even though the Greek forces were ultimately defeated after a local resident, Ephialtes, betrayed them.
Leonidis’s strategy–choosing to engage the Persians at the pass of Thermopylae–seems so deceptively simple. Most brilliant strategies often do. However, Leonidis’s situational awareness and understanding revealed this narrow pass as the ideal terrain to provide the opportunity for the small, well-trained and highly motivated Greek army of 7,000 to gain advantage over a Persian army estimated by historians to be between 100,000 and 300,000. Had it not been for the treachery of Ephialtes it may have ended in one of the most spectacular military victories in recorded history.
What are the parallels between these examples and conceiving business strategy
THE BUSINESS WORLD
Seek the opportunity that provides advantage
Deepen the advantage by achieving “fit” in your activities
Conceiving strategy is central to any leadership mandate
As Jack Welch once famously said to his senior leaders at G.E., “If you don’t have an advantage, then don’t compete.” His comments signaled that the company would divest itself of business units with no competitive advantage. The implication of this decision on the continued employment of the leaders of these business units was obvious.
It’s time that Mark’s boss accepts that it is his responsibility to lead the development of a winning strategy for the business and that his own poor situational awareness and understanding is hurting the business.
If he doesn’t get it soon, then perhaps the board should take action and replace him with someone who does.